CHICAGO, Nov. 1, 2011 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported that third-quarter revenues increased
19 percent to a record $874 million
and operating income increased 29 percent to $572 million compared with third-quarter 2010.
Third-quarter 2011 operating margin was 65 percent, the
highest quarterly GAAP operating margin to date, and up from 60
percent in the third quarter of 2010. Operating margin is
defined as operating income as a percentage of total revenues.
Third-quarter net income attributable to CME Group was
$316 million, up 29 percent compared
with the third quarter of 2010. Diluted earnings per share
were $4.74, up 30 percent compared
with the same period last year.
"CME Group's core business continued to perform very well, and
during the quarter we delivered significant growth in revenue,
operating income and earnings per share," said CME Group Executive
Chairman Terry Duffy. "On the
regulatory front, we were pleased to see the CFTC rulemaking on
position limits establish equivalent limits for physically and
cash-settled contracts, other than natural gas. We will
continue to work closely with regulators and market participants
during this important rulemaking process."
"Strong performance across our diverse product portfolio,
coupled with strong expense discipline, allowed us to deliver
record results," said CME Group Chief Executive Officer
Craig Donohue. "Heightened expense
focus contributed to our success, and is reflected in today's
results along with our commitment to maintain expense growth below
five percent in 2012 and beyond. We have seen an acceleration
in our OTC swaps business. Interest rate swaps and credit
default swaps cleared at CME totaled $44
billion during the third quarter, while cleared activity in
October exceeded $35 billion."
Third-quarter 2011 average daily volume was 14.7 million
contracts, up 27 percent compared with the third quarter of 2010.
Clearing and transaction fee revenue of $733 million was up 22 percent from $599 million in third-quarter 2010. Market
data and information services revenue was $107 million, up 6 percent from $101 million in the same quarter last year,
primarily due to CME Group Index Services business revenue
growth.
Third-quarter total average rate per contract was 77.9 cents, down 4 percent from third-quarter
2010, and down 3 percent from second-quarter 2011. The
sequential variance can be attributed primarily to a higher
proportion of lower-priced financial products volume relative to
the second quarter of 2011, as well as the impact from higher
volume discounts.
Third-quarter 2011 operating expense was $302 million, up 4 percent from third-quarter
2010, but trending down from the first and second quarters of 2011
and illustrating the company's intent to manage the organization as
efficiently as possible while still focusing intently on key
longer-term growth initiatives. Third-quarter 2011
non-operating expense was $26
million, driven primarily by interest expense and borrowing
costs of $29 million, offset by
$4 million of investment income.
As of September 30, the company
had $876 million of cash and
marketable securities and $2.1
billion of debt. Since the Board authorization of a
$750 million share buyback program on
May 9, 2011, the company has
purchased more than 800,000 shares in total. During the third
quarter, 590,000 shares were purchased, with an approximate
aggregate value of $155 million.
Updated Guidance
- The company expects 2011 operating expenses of between
$1.23 billion and $1.235
billion.
CME Group will hold a conference call to discuss
third-quarter 2011 results at 8:30 a.m.
Eastern Time today. A live audio Webcast of the call
will be available on the Investor Relations section of CME Group's
Web site at www.cmegroup.com. An archived recording will be
available for up to two months after the call.
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural commodities, metals, weather
and real estate. CME Group brings buyers and sellers
together through its CME Globex® electronic trading platform and
its trading facilities in New York
and Chicago. CME Group also operates CME Clearing, one of the
world's leading central counterparty clearing providers, which
offers clearing and settlement services for exchange-traded
contracts, as well as for over-the-counter derivatives transactions
through CME ClearPort®. These products and services ensure that
businesses everywhere can substantially mitigate counterparty
credit risk in both listed and over-the-counter derivatives
markets.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME,
Globex and Chicago Mercantile Exchange are trademarks of Chicago
Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the
Board of Trade of the City of
Chicago, Inc. NYMEX, New York Mercantile Exchange and
ClearPort are registered trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange,
Inc. All other trademarks are the property of their
respective owners. Further information about CME Group (NASDAQ:
CME) and its products can be found at www.cmegroup.com.
Statements in this press release that are not historical
facts are forward-looking statements. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or implied in any forward-looking statements. Among the factors
that might affect our performance are: increasing competition by
foreign and domestic entities, including increased competition from
new entrants into our markets and consolidation of existing
entities; our ability to keep pace with rapid technological
developments, including our ability to complete the development,
implementation and maintenance of the enhanced functionality
required by our customers; our ability to continue introducing
competitive new products and services on a timely, cost-effective
basis, including through our electronic trading capabilities, and
our ability to maintain the competitiveness of our existing
products and services, including our ability to provide effective
services to the over-the-counter market; our ability to adjust our
fixed costs and expenses if our revenues decline; our ability
to generate revenues from our processing services; our
ability to maintain existing customers, develop strategic
relationships and attract new customers; our ability to expand and
offer our products outside the United
States; changes in domestic and non-U.S. regulations;
changes in government policy, including policies relating to common
or directed clearing and changes as a result of legislation
stemming from the implementation of the Dodd-Frank Act; the costs
associated with protecting our intellectual property rights and our
ability to operate our business without violating the intellectual
property rights of others; our ability to generate revenue from our
market data that may be reduced or eliminated by the growth of
electronic trading, the state of the overall economy or declines in
subscriptions; changes in our rate per contract due to shifts in
the mix of the products traded, the trading venue and the mix of
customers (whether the customer receives member or non-member fees
or participates in one of our various incentive programs) and the
impact of our tiered pricing structure; the ability of our
financial safeguards package to adequately protect us from the
credit risks of clearing members; the ability of our compliance and
risk management methods to effectively monitor and manage our
risks, including our ability to prevent errors and misconduct and
protect our infrastructure against security breaches and
misappropriation of our intellectual property assets; changes in
price levels and volatility in the derivatives markets and in
underlying fixed income, equity, foreign exchange, interest rate
and commodities markets; economic, political and market conditions,
including the volatility of the capital and credit markets and the
impact of economic conditions on the trading activity of our
current and potential customers stemming from the financial crisis
that began in 2008 and any other future crises; our ability to
accommodate increases in trading volume and order transaction
traffic without failure or degradation of performance of our
trading and clearing systems; our ability to execute our growth
strategy and maintain our growth effectively; our ability to manage
the risks and control the costs associated with our acquisition,
investment and alliance strategy; our ability to continue to
generate funds and/or manage our indebtedness to allow us to
continue to invest in our business; industry and customer
consolidation; decreases in trading and clearing activity; the
imposition of a transaction tax or user fee on futures and options
on futures transactions and/or the repeal of the 60/40 tax
treatment of such transactions; the unfavorable resolution of
material legal proceedings and the seasonality of the futures
business. More detailed information about factors that may affect
our performance may be found in our filings with the Securities and
Exchange Commission, including our most recent periodic reports
filed on Form 10-K and Form 10-Q, which are available in the
Investor Relations section of the CME Group Web site. We undertake
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
CME-E
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(in
millions)
|
|
|
|
|
|
|
|
September 30, 2011
|
|
December 31, 2010
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
829.3
|
|
$
855.2
|
|
Marketable
securities
|
46.6
|
|
50.2
|
|
Accounts
receivable, net of allowance
|
369.5
|
|
297.5
|
|
Other current
assets (includes $40.0 and $0 in restricted cash)
|
168.4
|
|
146.1
|
|
Cash performance
bonds and guaranty fund contributions
|
7,677.5
|
|
4,038.5
|
|
Total current assets
|
9,091.3
|
|
5,387.5
|
|
Property, net of accumulated
depreciation and amortization
|
813.8
|
|
786.8
|
|
Intangible assets - trading
products
|
17,040.5
|
|
17,040.5
|
|
Intangible assets - other, net
of accumulated amortization
|
3,345.8
|
|
3,453.3
|
|
Goodwill
|
7,984.4
|
|
7,983.6
|
|
Other assets (includes $20.5 and
$0 in restricted cash)
|
611.8
|
|
394.4
|
|
Total Assets
|
$
38,887.6
|
|
$
35,046.1
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts
payable
|
$
40.7
|
|
$
51.8
|
|
Short-term
debt
|
-
|
|
420.5
|
|
Other current
liabilities
|
204.1
|
|
270.4
|
|
Cash performance
bonds and guaranty fund contributions
|
7,677.5
|
|
4,038.5
|
|
Total current
liabilities
|
7,922.3
|
|
4,781.2
|
|
Long-term debt
|
2,106.3
|
|
2,104.8
|
|
Deferred tax liabilities,
net
|
7,735.2
|
|
7,840.4
|
|
Other liabilities
|
190.0
|
|
191.5
|
|
Total Liabilities
|
17,953.8
|
|
14,917.9
|
|
Redeemable non-controlling
interest
|
69.5
|
|
68.1
|
|
Shareholders' equity
|
20,864.3
|
|
20,060.1
|
|
Total Liabilities and
Shareholders' Equity
|
$
38,887.6
|
|
$
35,046.1
|
|
|
|
|
|
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(dollars in
millions, except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
$ 732.7
|
|
$ 598.7
|
|
$ 2,111.8
|
|
$ 1,860.9
|
|
Market data and
information services
|
107.0
|
|
101.4
|
|
321.9
|
|
291.0
|
|
Access and
communication fees
|
12.0
|
|
11.3
|
|
34.8
|
|
33.4
|
|
Other
|
22.5
|
|
22.0
|
|
75.6
|
|
55.2
|
|
Total
Revenues
|
874.2
|
|
733.4
|
|
2,544.1
|
|
2,240.5
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
119.9
|
|
110.4
|
|
359.7
|
|
312.3
|
|
Communications
|
11.0
|
|
9.8
|
|
31.7
|
|
30.8
|
|
Technology support
services
|
13.3
|
|
12.5
|
|
38.7
|
|
37.4
|
|
Professional fees
and outside services
|
29.0
|
|
26.1
|
|
90.4
|
|
82.5
|
|
Amortization of
purchased intangibles
|
33.0
|
|
32.4
|
|
99.2
|
|
95.5
|
|
Depreciation and
amortization
|
32.4
|
|
33.1
|
|
95.1
|
|
98.1
|
|
Occupancy and
building operations
|
18.5
|
|
17.0
|
|
56.9
|
|
57.7
|
|
Licensing and
other fee agreements
|
22.6
|
|
20.5
|
|
64.7
|
|
62.8
|
|
Other
|
22.4
|
|
28.7
|
|
77.0
|
|
90.7
|
|
Total
Expenses
|
302.1
|
|
290.5
|
|
913.4
|
|
867.8
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
572.1
|
|
442.9
|
|
1,630.7
|
|
1,372.7
|
|
|
|
|
|
|
|
|
|
|
Non-Operating Income
(Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
3.7
|
|
12.6
|
|
27.1
|
|
28.1
|
|
Gains (losses) on
derivative investments
|
-
|
|
-
|
|
(0.1)
|
|
6.0
|
|
Interest and other
borrowing costs
|
(29.0)
|
|
(35.9)
|
|
(87.8)
|
|
(105.2)
|
|
Equity in net
losses of unconsolidated subsidiaries
|
(0.9)
|
|
(3.9)
|
|
(3.1)
|
|
(6.9)
|
|
Total
Non-Operating
|
(26.2)
|
|
(27.2)
|
|
(63.9)
|
|
(78.0)
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
545.9
|
|
415.7
|
|
1,566.8
|
|
1,294.7
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
(230.9)
|
|
(171.4)
|
|
(499.1)
|
|
(539.0)
|
|
Net Income
|
315.0
|
|
244.3
|
|
1,067.7
|
|
755.7
|
|
Less: Net income (loss)
attributable to redeemable non-controlling interest
|
(1.1)
|
|
-
|
|
1.3
|
|
0.5
|
|
Net Income Attributable to CME
Group
|
$ 316.1
|
|
$ 244.3
|
|
$ 1,066.4
|
|
$ 755.2
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
$ 4.76
|
|
$ 3.67
|
|
$ 15.99
|
|
$ 11.42
|
|
Diluted
|
4.74
|
|
3.66
|
|
15.94
|
|
11.39
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
66,458
|
|
66,556
|
|
66,690
|
|
66,125
|
|
Diluted
|
66,667
|
|
66,744
|
|
66,901
|
|
66,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
Year-to-date 2011 results
include the Q1 2011 tax adjustment reflecting a $164 million
benefit within tax expense associated with a change in our expected
effective tax rate and its impact on our deferred tax expense and
the release of reserves related to a foreign
investment.
|
|
Year-to-date 2010 results
include the Q2 2010 $20.5 million write down of goodwill of the
company’s subsidiary, Credit Market Analysis Limited
(CMA).
|
|
|
CME Group
Inc.
|
|
Quarterly
Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
3Q
2011
|
|
Trading Days
|
64
|
|
64
|
|
62
|
|
63
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
Average Daily Volume (ADV)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
ADV (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
3Q
2011
|
|
Interest rates
|
5,020
|
|
5,566
|
|
6,424
|
|
6,449
|
|
6,518
|
|
Equities
|
2,809
|
|
2,545
|
|
2,906
|
|
2,842
|
|
4,040
|
|
Foreign exchange
|
866
|
|
887
|
|
961
|
|
918
|
|
988
|
|
Energy
|
1,657
|
|
1,581
|
|
1,973
|
|
1,757
|
|
1,670
|
|
Agricultural
commodities
|
941
|
|
1,067
|
|
1,154
|
|
1,159
|
|
1,032
|
|
Metals
|
257
|
|
372
|
|
376
|
|
403
|
|
454
|
|
Total
|
11,550
|
|
12,018
|
|
13,794
|
|
13,528
|
|
14,702
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
9,574
|
|
9,978
|
|
11,605
|
|
11,454
|
|
12,463
|
|
Open outcry
|
1,327
|
|
1,418
|
|
1,467
|
|
1,393
|
|
1,557
|
|
Privately negotiated
|
181
|
|
222
|
|
224
|
|
242
|
|
257
|
|
Exchange-traded
Total
|
11,082
|
|
11,618
|
|
13,296
|
|
13,090
|
|
14,276
|
|
CME ClearPort
|
468
|
|
400
|
|
498
|
|
438
|
|
426
|
|
Total
|
11,550
|
|
12,018
|
|
13,794
|
|
13,528
|
|
14,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rate
Per Contract (RPC)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
RPC
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
3Q
2011
|
|
Interest rates
|
$ 0.495
|
|
$ 0.496
|
|
$ 0.481
|
|
$ 0.486
|
|
$ 0.479
|
|
Equities
|
0.708
|
|
0.702
|
|
0.705
|
|
0.709
|
|
0.703
|
|
Foreign exchange
|
0.795
|
|
0.804
|
|
0.823
|
|
0.868
|
|
0.801
|
|
Energy
|
1.540
|
|
1.631
|
|
1.573
|
|
1.595
|
|
1.580
|
|
Agricultural
commodities
|
1.256
|
|
1.219
|
|
1.271
|
|
1.303
|
|
1.264
|
|
Metals
|
1.791
|
|
1.708
|
|
1.732
|
|
1.636
|
|
1.649
|
|
Average
RPC
|
$ 0.810
|
|
$ 0.813
|
|
$ 0.808
|
|
$ 0.807
|
|
$ 0.779
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded
|
$ 0.747
|
|
$ 0.748
|
|
$ 0.740
|
|
$ 0.745
|
|
$ 0.724
|
|
CME ClearPort
|
2.292
|
|
2.704
|
|
2.630
|
|
2.665
|
|
2.621
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE CME Group Inc.